Punch Taverns' warning over £2bn refinancing

Punch Taverns, owner of 4,000 pubs across Britain, today launched a £2.3 billion refinancing package and told bondholders if they do not back it they and shareholders could lose “significant value.”

The plan, 14 months in the making, has been tweaked twice in recent months but could still face considerable opposition from bondholders. That was reflected by executive chairman Stephen Billingham, who said: “We want all stakeholders to consider the proposals carefully and thoroughly. We will continue to be available to answer any questions. It is the view of the board that the benefits of approving the restructuring are clear and of benefit to all stakeholders.

“However, failure to do so will lead to a much worse outcome with considerable uncertainty for the business and potentially significant loss of value.”

Punch’s attempt to cut its debt from £1.5 billion to under £1.2 billion would see junior bondholders take a haircut. If not, the company says it would have to default on some bonds, leading to a £188 million mandatory pay-out and loss of a £52 million cash contribution. The debts date from Punch’s rapid expansion under former chief executive Giles Thorley.